Russian cellist Roldugin – story of business success

Russian cellist Roldugin – story of business success
Sergey Roldugin

A piece on how a Russian cellist and businessman earned 420 million rubles in a couple of days.⁠

Sergey Roldugin is a cellist and a guest conductor at the Mariinsky Theater. An artist at the Saint Petersburg Philarmonia, he held a professorship at the Saint Petersburg Conservatory, and was named a People's Artist of Russia. At the same time, according to the Panama Papers about the Mossack Fonseca shell corporations, published by the International Consortium of Investigative Journalists, the musician is also the most talented businessman in the world. In June 2010, he managed to earn 420 million rubles in 2 days by purchasing and immediately selling the same goods. Having analyzed the Mossack Fonseca documents, Novaya Gazeta proved that Russia had lost huge amount of tax money because of this financial prodigy.

The story revolves around the Sandalwood Continental offshore company, which is registered in the British Virgin Islands. It is not Sergey Roldugin who is the company’s official owner, but a St. Petersburg businessman Oleg Gordin. However, it turns out that Gordin is the legal representative of the musician

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On June 23, 2010, the Sandalwood Continental company purchased a 3% stake in the Rossiya bank (66,198 shares at par value - 200 rubles per 1 share) from Yevgeny Malov, a former business partner of Gennady Timchenko and one of the founders of the Gunvor Group oil trader. In total, Sandalwood Continental paid Malov 13.2 million rubles. After that, on June 25, 2010, the Roldugin’s offshore firm sold the entire stake to the Cypriot company Horwich Trading, but this time at a cost of $ 211.5 per share, which equals to more than 6.5 thousand for one piece. Roldugin’s net income totaled 420 million rubles, and it raised some questions as to how the Russian cellist could guess the best timing for such a great deal.

A month later, the Gazprom Public Joint Stock Company tried to repeat the amazing financial success of the Sandalwood Continental offshore firm, and decided to buy shares of the Rossiya bank as well. However, by that time the latter merged with the official bank of Gazprom – Gazenergoprombank. As a result, the Rossiya’s own bank stock increased and its shares were now worth 170 times more than when Roldugin had purchased them through his offshore. Besides, Rossiya did not pay a penny to the shareholders of Gazenergoprombank for the merging process. Instead, Rossiya simply issued additional shares, which amounted to no more than 16% in the united bank.

In 2013, Gazprom sold all the shares of the Rossiya bank, and the price for one share was 2 times lower than that at which they had been bought 3 years ago. One would assume that in 3 years the bank's financial condition had deteriorated significantly, but that was simply not the case. On the contrary, all key indicators of the Rossiya bank had increased during that time period, but this fact alone was meaningless. Who would blame a person for being lucky and finding another golden opportunity?

Financial analysts have figured out that such a swap ratio was particularly disadvantageous to the state. Novaya Gazeta estimated that because of all the above mentioned financial transactions Gazprom had lost about 5 billion rubles. This means a decrease of tax paid by the company, and accordingly, leads to lesser chances of indexation of retirement benefits, social securities, salaries of teachers, health care workers and other staff at public institutions. But what would it matter in the light of another golden opportunity for a very lucky person?

As a reminder, on April 3, 2016, 11 million secret documents were leaked, which indicated that the Mossack Fonseca & Co law firm, headquartered in the Panama City and more than 40 other offices around the world, had assisted its customers in the illegal transfer of large sums of money into the offshore companies. As a result, hundreds of prominent Russian politicians, civil servants and other citizens were suspected of tax evasion and money laundering. Once the International Consortium of Investigative Journalists published this information, it became evident that many of the common Russian officials and public figures were in fact dollar billionaires, who owned luxury real estate on a world-wide basis.

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